Many Act Before Tax Makes Spirits Higher

By Leah Y. LatimerBy Leah Y. LatimerOctober 1, 1985

Consumers of demon rum and other alcoholic beverages jammed liquor stores in the Washington area yesterday, rushing to buy before a 19 percent boost in the federal tax on alcohol -- the first in 34 years -- went into effect today.

It looked like Christmas in September at stores such as the District's Central Liquor, where extra staff members carted cases of rum, gin, Scotch, bourbon and vodka to customers' cars. "We've had some $3,000 to $5,000 shots," said Herb Rothberg, Central's president.

The 19 percent jump in the federal excise tax on distilled spirits, combined with normal yearly price increases, are expected to raise the cost of some brands by more than $2.50 for a half-gallon bottle, and to increase the price of drinks at bars and restaurants by 20 cents and more.

The tax on the popular one-fifth-gallon size of 80-proof liquor will jump 32 cents, to $2.05 per bottle, according to a federal tax formula based on alcohol content. Beer and wine are not affected.

In the Washington area, many liquor shoppers said they were getting a jump on holiday gift shopping, stocking the bar for out-of-town guests and preparing for parties yet to be planned. In short, they claimed to be buying for almost everyone but themselves as they tripled the regular volume of business at some stores.

"At Christmas, people buy bottles for gifts, but here people are buying by the cases, storing up before the tax," Central's Rothberg said.

"I thought I'd save a couple of bucks," said Rick Schulman as he left the store at 518 Ninth St. NW, a hefty brown bag tucked under one arm. "I would've bought more, but they're out of a lot of stuff."

I'm just replacing my inventory," James Whyte said as he exited the same store.

Despite the activity, some store owners said many of their customers were not aware of the tax increase. As a result, the owners said, many people have been surprised in recent days to learn of it.

"What?" said Raynard Wilkins, who went into the Imperial Trade liquor store at 1050 17th St. NW to buy a soda. "I'm shocked," he said of the tax boost.

The increase was enacted last year after members of Congress from tobacco states, including Sen. Jesse Helms (R-N.C.), sought to cut the excise tax on cigarettes from 16 cents a pack to 8 cents. To make up for lost revenue, Congress voted to increase the alcohol tax for the first time since 1951.

Public interest groups have applauded the change, maintaining that higher taxes on alcohol can lead to fewer alcohol-related health problems and accidents and could help reduce the national deficit by $12 billion a year. Yesterday, Deborah Schecter of the National Alcohol Tax Coalition said that her group still seeks a federal tax on beer and wine.

"The discrepancy is not encouraging [the prevention of] alcohol abuse among teen-agers who drink beer and wine," she said.

In Virginia, where liquor sales are controlled by the state, sales seemed less brisk than in the District and Maryland. According to Connie Blue, manager of a store in Crystal City, sales were only slightly above normal. Customers accustomed to price increases and inflation "don't think [stocking up] is worth it. Paying 50 cents on a bottle is no big deal to them," she said.

At Imperial liquors, owner Chol Kim kept employes working overtime during the weekend to mark and count the 12,800 bottles he had on stock in his small store. Large retailers will be required to pay a one-time tax on all stock on hand today in order to discourage store owners from stockpiling liquor in advance of the tax increase.